Tesco and Morrisons continue to lose out to Aldi and Lidl as sales slide amid lowest market growth in a decade

Supermarkets in Britain saw the lowest market growth in a decade, with Tesco and Morrisons both recording falling sales over the past 12 weeks as competition from discounters intensifies, industry data has showed.

Tesco and Morrisons saw sales falling 3.8 per cent in the 12 weeks ending July 20 compared to the same period last year, according to the figures from market researcher Kantar Worldpanel.

Kantar also said that overall, the grocery market recorded 0.9 per cent growth in the last period, the lowest in ten years, as cash-strapped shoppers spend more online and buy less, often from local convenience stores to save money.

Tesco - Britain’s biggest supermarket - saw its market share fall to 28.9 per cent from 30.3 per cent in the period, while Morrisons, which is the fourth largest grocer in the country, saw its market share shrink to 11 per cent from 11.5 per cent, Kantar said.

But sales at German discounters Aldi rose 32.2 per cent, taking its market share to 4.8 per cent, almost in line with upmarket grocer Waitrose, while Lidl recorded sales growth of 19.5 per cent and saw its market share rise from 3.1 per cent to 3.6 per cent.

In the face of declining sales, Tesco and Morrisons have both implemented new strategies to revive their fortunes and have seen changes in leadership, with Morrisons today appointing Tesco veteran Andrew Higginson as its next chairman.

Last week Tesco chief executive Philip Clarke was ousted as the grocer continued to report falling sales and issued a second warning of lower-than-expected profits.

Under Clarke's leadership, Tesco invested £1billion in cutting prices, refreshing stores, increasing staff numbers and service levels but the business has continued to lose market share.

Morrisons new chairman Higginson, who spent 15 years on the Tesco board including as finance director and chief executive of retailing services, will take over as Morrisons' chairman on October 1 following the retirement of Sir Ian Gibson.

Mr Bubb said the embattled chief
executive could ‘sleep easy for a couple more months’ before the new
chairman takes up his role, but added: ‘After that the pressure will be
on and it will be interesting to see how long he lasts.’

Mr Higginson said: ‘Whilst there are undoubted challenges in the industry at the moment, this is a fine business and I am looking forward to working with the great team at Morrisons who work hard every day to serve customers.’

Current chairman Sir Ian Gibson said: ‘Andy Higginson has a tremendous reputation and a distinguished career at the forefront of retailing in the UK and I am sure he will be a huge asset to Morrisons.’

Analysts at Shore Capital said: ‘Mr Higginson brings a wealth of experience and talent to what it has to be said has been a troubled group.'

Morrisons plunged to an annual loss of £176million for the year to February 2 and last month announced it was slashing 2,600 jobs as part of a drive to modernise the way its stores are managed.

The Bradford-based firm has said it is investing £1billion over three years as it cuts prices to compete, while it is also belatedly rolling out its online food offer this year, years after its main competitors entered the market.

CEO Philips was subjected to a humiliating dressing down at the firm's AGM last month when former boss Sir Ken Morrison compared his strategy with the manure produced by his cattle herd.

Among the other 'Big Four' supermarkets, Asda and Sainsbury's both held onto their market share and recorded sales growth of 0.9 and 1.2 percent respectively, Kantar said.

Shares in the three blue chip food retailers were firmer.

Morrisons was 1.9p higher at 174.2p in early afternoon trading, while Tesco shares were up 2.2p at 270.75p, and Sainsburys added 3.9p at 323.7p.

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Tesco and Morrisons continue to lose out to Aldi and Lidl as sales slide